Canadian markets will be buzzing Monday over Great-West Lifeco Inc.’s friendly deal to acquire Canada Life, in a $7.3 billion transaction that will create the country’s largest insurance company.

The two insurers announced early Monday they had reached an agreement that will see Great West offer $44.50 in cash and stock for each Canada Life share.

The deal trumps Manulife Financial’s $6.2 billion hostile bid for Canada Life launched in December 2002.

U.S. stock markets are closed today for Presidents’ Day.

Overseas, gold and oil prices declined as divisions between the United States and Europe caused traders to assume the threat of war in Iraq has receded.

Over the weekend, demonstrator around the world gathered to protest any U.S-led military action against Iraq. Despite the protests, the United States is sticking to its position on Iraq. The administration of President George Bush says it will not back down, despite pleas last week from most members of the U.N. Security Council that Bush give weapons inspectors more time.

In London, the FTSE 100 index is up 50.6 points to 3,662.5 in early afternoon trading. The Frankfurt DAX is up 0.6%, while the Paris CAC 40 has gained 1.4%.

Overnight in Asia, stock markets closed higher across the board after Friday’s gains on Wall Street.

In Hong Kong, the Hang Seng Index rose 181.92 points to 9,383.68. Tokyo’s Nikkei average was up 69.97 points to 8,771.89.

In economic news, Statistics Canada releasd the leading indicator for January. Stats Can reported that the growth of the composite leading indicator slipped to a 0.1% gain, after a brief upturn to 0.3% in December. Six of the 10 components fell, four more than in December and the most in over a year.

Investors will be looking ahead to tomorrow’s federal budget, Finance Minister John Manely’s first.

The federal budget is expected to focus primarily on health care. Other areas which will see significant new funding are likely to include defence, the environment, child support, and infrastructure. Other possible measures include an increase in RRSP limits and a phasing out of capital taxes for corporations.